For Federal Reserve Chair Janet Yellen, the current too-lowinflation rate is not only “transitory,” it's also“idiosyncratic.”

Aside from the plunge in oil, the head of the central bank thismonth chose to highlight two culprits for the subdued priceenvironment—medical care and non-market prices—which, combined,account for about 24 percent of the Fed's preferred inflationmeasure. By choosing to focus on two such quirky components, Yellenshowed that she and most of her colleagues remain confident theunhealthy lack of inflation is only temporary.

Officials this month were so sure prices would eventually risecloser to their 2 percent goal that theyraised the benchmark interest rate so they wouldn't have totighten too quickly once inflation did flare.

“There are various idiosyncratic factors that affect coreinflation,” Yellen said at a Dec. 16 press conference. “But Ipersonally don't think we're in a world where inflation is beingdetermined in a different way than it has historically.”

At least for medical expenses, Yellen is probably ontosomething.

Those costs, which alone make up almost 17 percent of thepersonal consumption expenditure price index that is tracked by thecentral bank, rose just 0.9 percent in November from a yearearlier. That goes a long way to explain why the core pricemeasure, which excludes food and fuel, climbed only 1.3 percent inthe past 12 months.

So what's to blame for the slower health-care inflation in 2015?Two years of government increases in reimbursement rates tophysicians for Medicaid services, which tend to leak into what theprivate market charges, expired at the start of the year, saidOmair Sharif, rates sales strategist at SG Americas Securities LLCin New York.

Policy makers are “looking through that kind of stuff becausethey know that these are sort of one-off legislative changes,”Sharif said. “Inflation should move higher because these thingswill be less of a drag going forward.”

Economists at Goldman Sachs Group Inc. in New York also wrotelast month that they expect medical-care costs to rise early in2016, in part as the year-over-year comparisons become morefavorable and also because of more wage growth in health-carejobs.

As for non-market prices, which Yellen said “are a little hardto understand,” the Fed chair probably was pointing to a number ofimputed costs within the PCE price index that are less directlyconnected to the sort of supply-and-demand dynamics that wouldnormally cause economists to worry about sluggish inflation.

Prices paid for financial services and insurance, for example,have a 7 percent share in the PCE index, so they can easily holdback the figures. That category includes investment advice and morecomplicated imputed costs such as the difference between interestpaid on a checking account and what would be earned if that moneywere invested in government securities.

Costs for these financial services climbed 0.8 percent inNovember, the biggest gain in eight months, after falling 0.5percent in October, the most since 2009. Such volatility is easyfor policy makers to dismiss.

Yellen therefore has reason to believe inflation can make acomeback even as the central back begins to gradually raiseinterest rates.

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